The rupee weakened by 17 paise in relation to the US dollar and closed at 83. 60 (provisional) on Wednesday. This decline was mainly due to the performance of the American currency in the overseas market and stringent crude oil prices. Nevertheless, a firm trend in domestic equities, where benchmark indices touched new highs, helped cover a part of the depreciation in the local currency and check further slides, as reported by the forex traders. The INR vs USD exchange rates began at 83.45 for the interbank foreign exchange market, an intraday high of 83.43, while the lowest was 83.61 against the greenback during the session, but it lost some value. Finally, the INR vs USD rate stabilized at 83. 60, which is 17 paise down from its previous close in the market.
Yesterday, the rupee was higher by 4 paise, and it stood at 83.43 to the US dollar of the currency. Thus, it is expected that future sessions could bring some support to the rupee due to positive domestic market and increases in Foreign Institutional Investors (FIIs) inflows. A trade analyst said that based on the market analysis, the USDINR spot price will range between Rs 83.30 and Rs 84. However, the dollar index, which represents the trade-weighted average of the greenback against six major currencies, was trading at 0.22 percent higher at about 105.83.
Global oil benchmark Brent crude futures also exerted pressure on the rupee, as the latter was trading 0.80 percent higher than the global average at USD 85.69 per barrel. In the present context of emerging market economies, crude oil price shows a negative correlation with the rupee, primarily because India imports a large volume of oil and has to spend more dollars in the process.
In the domestic equity market, the 30-share Bombay Stock Exchange (BSE) sensitivity index, called Sensex, rose by 620.73 points, or 0.80 percent; it closed at a new high of 78,674.25 points. Similarly, the broader 50 index NSE Nifty ended 147.50 points, or 0. 62 percent higher at 23,868.80 points.
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